Hong Kong’s Securities and Futures Commission (SFC) is drawing plans in reaction to the growing appetite for cryptocurrencies like bitcoin among retail investors and traders – by regulating the sector.

Speaking to the South China Morning Post in a report on Monday, outgoing chairman Carlson Tong Ka-shing insisted that autonomous, self-governing administrative region south-east of mainland China will not follow the latter’s approach with an outright ban on the cryptocurrency sector.

“We do not think imposing a total ban on these platforms is necessarily the right approach,” the senior official told the SCMP, remarking that traders will find ways circumvent all barriers.

“Even if we were to ban them, transactions can still be easily conducted via platforms in overseas markets,” Tong added.

Instead, the SFC is looking to usher in a formal regulatory framework for domestic cryptocurrency trading, even if the sector falls beyond its purview as the authority’s reach only extends to securities.

Cryptocurrency trading, Tong stressed, do not fall within the custodian, audit or valuation requirements under the SFC’s Securities and Futures Ordinance. They “may not qualify as securities,” the official said, suggesting the necessity for a careful regulatory approach to oversee crypto trading platforms.

He added:

“We need to see if and how these platforms can be regulated to a standard that is comparable to that of a licensed trading venue, while at the same time ensuring investors interest are being protected.”

The suggestion has been welcomed by domestic exchange operators in Hong Kong. The report cites Circle, with a base of operations in Hong Kong, and BitMEX, which hired a former regulator as its operations chief after moving into some of the world’s most expensive office spaces, looking forward to the regulations encouragingly.

The Hong Kong crypto market has been scrutinized by the securities regulator extensively in recent years. Earlier in March, the authority shut down an initial coin offering (ICO) citing “potential unauthorized promotional activities and unlicensed regulated activities.” The following month, SFC deputy chief July Leung labeled many ICOs as “dubious, down right frauds”